In many developing countries, small and medium-sized enterprises (SMEs) are increasingly concerned about being able to benefit from the electronic, or "e", dimension of the information age. They are far more aware of the rich potential of "e" to sharpen their competitiveness in world markets. But with limited resources and a bewildering choice of information and communications technologies (ICTs), they need help in deciding how and where to invest.
Governments, trade support agencies and technical cooperation institutions can help 'put "e" to work' for the benefit of these firms. SMEs are, after all, the backbone of most developing country economies and foremost among their exporters.
Opportunities for small firms
The "e" dimension emerges as a powerful trade tool, widening market prospects, increasing market visibility, improving access to clients and reducing transaction and promotional costs. It throws open entirely new business opportunities, and also helps do 'old' business in new, more efficient ways, bringing new forms of support to exporters. Acquiring technology is one thing; making it work to benefit SMEs and society at large is quite another.
Countries want to ensure that their SMEs and the communities that rely on them for their economic well-being benefit tangibly from new digital opportunities. This is a key factor linking the, debates at the World Summit on the Information Society (Geneva, December 2003 and Tunis, December 2005) to the achievement of the United Nations' Millennium Development Goals by 2015.
"E" for exports
Many developing country firms are tapping into the new business opportunities offered by the digital economy. They are key exporters of ICT products and services, from semi-conductors to software, and ICT-enabled services, such as back office operations. Brazil and India are just a couple of shining examples. The possibilities for growth continue to be promising. What is lagging in many countries is how SMEs incorporate new technologies into their own business processes. SME managers and governments often want to hear more persuasive arguments for investing in "e".
Why invest in "e"?
There are three main reasons why developing countries should invest in "e". First, information and communication technologies can improve the ways they produce, market and buy and sell their goods and services. For instance, SMEs can use online auctions and exchange mechanisms on the web to buy and sell everything from automotive parts to almonds and from shoes to flowers.
Second, ICTs can help level the competitive playing field between developing and industrialized economies. For example, because the Internet is a global system, companies" exact locations are becoming, in many respects, increasingly irrelevant. Sellers can open new markets in previously unthought places and exchange valuable data across borders and time zones with small investments in standard Internet technologies.
Third, electronic business--retail and business-to-business--is growing substantially despite the dotcom companies staggering a few years ago. And it's not just business--governments are getting in on the act.
A solid investment strategy in "e" can help SMEs enter new markets and overcome or sidestep many traditional obstacles they face while competing internationally.
The public sector has a role to play here, working with business, as any national strategy to use "e" for trade development should start 'from the bottom up'. Once strategy-makers identify the business sector's needs and concerns, they can work towards creating an enabling environment, including a legal framework, e-government, financial access, Internet access and practical training. It also makes sense to focus in priority on areas and sectors where "e" tools can be most effective, i. …